Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures Harvard Business School Case 205

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636 (259) (93) 2.632 145.629 4.944 1. and administrative Interest expense Earnings before taxes and minority interests Income tax expense Equity income (loss) and minority interests Income from discontinued operations Net income Dividends on preference stocks Earnings attributable to common stocks 2000 184.393 (319) 4.445 127.708 19.047 3.252 9.053 7.956 (63) 2.342 1999 176. .452 (110) 4.552 7.957 15.002 (80) 5. 2001).915 6.893 Source: General Motors. ($ millions) Total net sales and revenues Cost of sales and other expenses Selling.Exhibit 1 GM Consolidated Income Statement December 31.558 140.164 2.664 22.750 9.922 1998 155.118 (353) 426 6. general. December 31. 2000 10-K (Detroit: General Motors.

Africa.Exhibit 6 GM¶s Largest Currency Exposures (Forecasted Receivables Less Payables) As of 12/31/00 ($millions) GMNA GME GMAP GMLAAM GM Total USD EUR JPY GBP SEK AUD CAD CHF PLN MXP OTHER 800 400 200 600 2000 (400) (2400) (200) (400) (3400) 200 200 500 900 1400 200 1600 (200) (800) (1000) 400 200 600 (1400) (200) (1600) 400 400 200 200 1200 1200 800 200 1000 Source: General Motors Figures have been disguised and do not reflect the actual operations of General Motors Corp. NOTES: GMNA: General Motors North America GME: General Motors Europe GMAP: General Motors Asian Pacific GMLAAM: General Motors Latin America. Middle East .

049 Source: Company documents. Figures have been disguised and do not reflect the actual operations of General Motors Corp.258) (6) (1.682) Amount as of September 30.737) (1.Exhibit 9 GM Canada ± Projected Cash Flow Exposure Cash Flows INFLOWS Canadian sales Tax refunds (GST) OUTFLOWS Material purchases Capital expenditures Other structural costs Tax expenditures Other expenditures 12 month C$ cash flow forecast (10.564 1. 2001 10. .180) (113) (1.

Figures have been disguised and do not reflect the actual operations of General Motors Corp. .Exhibit 10 GM Canada ± Net Monetary Asset/Liability Exposure Balance Sheet Account Amount as of September 30. 2001 683 271 118 1525 ASSETS Cash & cash equivalents Accounts & notes receivable Deferred income taxes Pension asset LIABILITIES Outside ± all other Other postretirement benefits Warranty Accounts payable and other C$ Monetary asset / (liability) position (93) (1949) (132) (2565) (2143) Source: Company documents.

.2 130.1 11.3 325.8 3. Interest subsidy owed by govt.0 45.5 101.7 24.8 190.8 2 60. as of September 30.5 20.6 2. Figures have been disguised and do not reflect the actual operations of General Motors Corp.9 Source: Company documents.0 ARS Monetary Liabilities Payables to local suppliers Provisions to local suppliers ARS loan (VAT financing) Other provisions Tax payable Total USD Monetary Liabilities Accounts payable Loans Total 224. 2001 ARS Monetary Assets Scrap incentive owed by govt. VAT credit and other tax owed by govt.7 7.3 13. Receivable (tax credit reimbursement) Other Total USD Monetary Assets Cash Receivables Total 2.5 23.7 9.Exhibit 11 GM Argentina Balance Sheet. Monetary Assets and Liabilities by Currency.

70 $40.30 Source: Company documents.40 $18.Exhibit 13 Cost of Hedging the ARS Exposure in Argentina Time Horizon / Hedging Period One-month Forward Three-month Forward Six-month Forward Twelve-month Forward Cost $6. .20 $28.